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We need to talk about money and how to ensure that we remain financially stable

By BURINI GLADYS
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Growing up, what is your most memorable financial lesson? At the end of last year, we were bemused to learn that you can quickly go from being a millionaire football player to an everyday man struggling to make a living. Would a little bit of financial literacy have leveraged the footballer to be a wise spender and investor?

Regardless of your level of income, you need to have an interest in your finances. It is beyond risible that you would work meticulously and tirelessly only to lack interest in where your money is going.

Finances might be one of the disconcerting areas in life to address, but unfortunately we owe our current and future selves financial security.

Unknown expenditure is one of the prime reasons that lead us into financial constraints. Persistently spending without keenly scrutinising what you have is not sustainable.

Eventually, it leads into debt which, sadly, progresses to borrowing, yet all this can be avoided. We do not need forensic accounting, we just need to pay a little bit more attention to what we have, track our spending and, where possible, save and invest.

The difference between debt and an income is a budget. You might be surprised some of the little nuggets you spend on take up a lot of your finances cumulatively over a year.

The good Lord has also called us to invest and save. Remember the guy with five talents? “Master, you delivered to me five talents; here, I have made five talents more.” His master said to him, “Well done, good and faithful servant. You have been faithful over a little; I will set you over much.”

After keenly managing our money, it is of paramount importance that we come to terms with our financial world.

None of us can afford to be duped into false, pretentious and non-existent investments with supposedly very high overnight returns.

What is a pyramid scheme? What is the Central Bank of Kenya rate? What is the savings rate? 

INVESTMENTS

Despite mobile money fast becoming the most preferred banking method; it is worth walking into your bank from time to time.

Financial advisors are at your disposal; consult them and learn which investments are worth your hard earned money with favourable returns.

There is no excuse for financial insecurity or indebtedness because of lack of knowledge. Do not assume knowledge either. If there are financial terms or conditions that are unclear, ask for clarification. When it comes to finance, there is too much at stake for us to be blasé.

In this vein, we should also take a keen interest in our national finances. We elected our leaders and entrusted them to use our taxes for our benefit, but we should also be holding them to account.

What is your county government’s budget and expenditure? How much is your constituency development fund and how has it been allocated?

We cannot always put in on the media to keep us informed. The onus is on us; after all how else will you measure the success of your leaders and know whether to re-elect them back into office?

Nationally, we should also be aware of how our economy is growing. What did the World Bank predict as Kenya’s 2018 Gross Domestic Product growth?

This is essentially the total value of everything we will produce in the country. Is it better this year and if not what can we do to improve the projections?

If the growth is slow and continues to reduce, this reduction is a recession. What if the economic growth continues on the negative? This leads to a massive dip in the economy, which is depression.

Then we should seek a high growth rate, right? No, this could lead to inflation, which leads to a rise in the price of goods and services, increasing our overall cost of living while reducing our standard of living. It all comes full circle; know your GDP, it affects your finances.

To answer the questions, the predicted GDP growth is 5.5 percent, the Central Bank rate is 10 percent, the savings rate is 6.43 percent and inflation is at 4.5 percent.

And so, if we spent just an eighth of the daily time we invest in politics on our personal and national finances, we would all be financially stable.

 The writer works with international businesses on commercial litigation. [email protected]